American Foundations

by Mark Dowie

MIT Press • 2001 • 298 pages • $29.95

Reviewed by Martin Morse Wooster

Nearly all large foundations follow thi: pattern in their history. They an founded by heroic entrepreneurs whc championed free enterprise and individua liberty. Within one generation after theii founder’s deaths, these foundations are ther captured by professional philanthropists who are nearly all “liberal.” The foundation then distributes grants to “liberal” organizations, which use the funds to attack capitalism.

The perennial problem of philanthropy is how to ensure that a donor’s intentions are followed. In American Foundations, Mark Dowie recognizes that today’s grant makers routinely ignore donor intent. His response is to call for implementing statist policies that, if enacted, would ensure that no one would want to create a foundation in the first place.

Although American Foundations is billed as “an investigative history,” it’s really an analysis of contemporary foundations with some historical examples. As a historian, Dowie is quite inept and routinely makes mistakes. For example, he writes that the Ford Foundation, “during the presidencies of George Kennan, Robert Hutchins, and Paul Hoffman in the 1970s and 1980s,” had many battles over what the foundation was to do with its wealth. George Kennan and Robert Hutchins were never Ford Foundation presidents, and Paul Hoffman’s tenure as Ford Foundation CEO was in the early 1950s, not the 1970s. In another passage, Dowie says that the Ford Foundation’s Fund for the Republic in the 1950s “every year . . . made five hundred smaller grants totaling $50 million in short-term pilot projects aimed at reforming K through 12 education nationwide.” However, the Fund for the Republic only received a one-time grant of $15 million from Ford, and gave very little to secondary education.

Dowie makes more serious errors when he nalyzes how today’s foundations operate, le is a doctrinaire leftist (his book was endorsed by Ralph Nader) who wants to bow that such large mainstream foundations as the Ford, MacArthur, Pew, Carnegie, nd Rockefeller foundations are not “liberal.” He contends that these foundations iave many members of their boards who are high-ranking officers of corporations and herefore not leftists. He also argues that, because these members of the philanthropicstablishment are somewhat stodgy in their grant-making, they must in some way be politically conservative.

But, as the Capital Research Center has demonstrated in its annual volume Patterns of Corporate Philanthropy, most big corporations routinely give money to anti-capitalist groups. Historically, corporations have not been as staunch supporters of liberty as they should be. And while it’s true hat many big foundations routinely support a short-list of favored groups without seeking out new ideas, it’s a ridiculous leap to say that groups that don’t change their funding (are “conservative” in their grant-making) are somehow right-wing.

The changes Dowie proposes will do little to solve the problems of philanthropy. He believes that foundations are too large, and proposes breaking them up into units that have endowments of $1 billion. Under his proposal, the Gates Foundation would have to split into 21 separate entities. Dowie also claims that by being tax-exempt, foundations are depriving “the public” of tax revenue. He thus insists that foundation boards have 45 percent of their members selected from “the public,” which Dowie defines as government bureaucrats and leftist nonprofit officials.

But the problems of foundations are notdue to their size, but that their officers ignore donor intent. If the $3 billion Carnegie Corporation were split into three parts, the new organizations would continue to ignore the ideals of Andrew Carnegie, a vigorous and forceful free-market advocate. As for Dowie’s second proposal, why would any entrepreneur create a foundation if he knew that nearly half the board would prefer that the foundation become a quasigovernmental entity?

Dowie is, however, right about two things. He notes that since 95 percent of all grant applications are rejected, grant writers must use a special language that is not quite English if they are to be successful. (For example, these grant seekers might say they favor “germinal concepts as ongoing seminal opportunities,” which means they are looking for new ideas.) Grant applications have become an art form.

Dowie is also right to support donors’ imposing term limits on their foundations. He approves of Irene Diamond, widow of a New York City real-estate developer, who created a foundation with a ten-year time limit, which enabled her to give large grants to scientists seeking a cure for AIDS. Alas, the only way to ensure that donor intent is preserved is for the creators of foundations to insist that their foundations cease to exist within 25 years after the founder’s death.

Mostly, however, American Foundations is a doctrinaire, error-ridden, and disappointing book that does little to assist readers who want to learn about the problems of philanthropy.